Difference between Formal and Informal communication

First difference is explained in terms of objectives of communication. Formal communication is a communication system which is to achieve the organizational objective. But the informal communication is the system to achieve individual objectives in an informal group. Every communication has certain objectives to fulfill. A formal communication is the communication which occurs in a formal way. Superior to subordinate communication or subordinate to superior is an example of formal communication. The formal communication is focused to do the tasks or jobs which one has to take. There by the organizational goals can be met. Informal communication meant to express the individual desires and interests. People find relaxed and comfort when they are in an informal gathering where they communicate each other their interests and tastes without any official barriers.

Second difference comes with the structural difference. Formal communication has a formal and well defined structure. Informal does not have a structure. There is a clear authority to report and get the instructions in a formal communication. This structure cannot be deviated as it ensures the smooth flow of communication and organization efficiency. Informal communication doesn't consider a structure as the people interact without any authority and level of job at which one works. A lower level employee may make a friendly talk with his superiors or high level officer without any official format.

The form and relationship of communication are discussed in the third difference. Only official and correct information are communicated in a formal communication. Informal communication takes both official as well as rumors. Information is officially communicated like the orders and instruction sent from the superior to sub ordinate. Informal communication takes the informal talks and gathering among the employees. Also relationships are controlled by rules, regulations, procedures etc. in formal communication. In an informal communication, the relationships are controlled by social and psychological needs of members.

Formal communication is in flexible nature. Informal is flexible. Once the duties and responsibilities are fixed, everything is to be communicated officially. These things cannot be changed frequently. Informal communication is flexible because it does not have the structure. The individuals in a group make the communication and they can be flexible as they like.

Limitations of capital budgeting

Capital budgeting refers to budgeting of capital expenditure. Long term planning and control of capital expenditure is called capital budgeting. According to R. M Lynch, ‘Capital budgeting consists in employment of available capital for the purpose of maximizing the long term profitability of the firm.” Capital budgeting is the process of analyzing alternative proposals and deciding whether not to commit fund to a particular investment proposal (long term project) whose benefits are to be realized over a period of time longer than one year. It is the total of generating, evaluating, selecting, and following up of capital expenditure alternative. Capital budgeting is concerned with heavy expenditure decisions. The benefits or returns from such expenditure are expected to be derived over many years in future. Success or failure of any business depends upon the quality capital budgeting. The limitations of capital budgeting are discussed under.

    The estimate of profitability of investment proposals is not accurate because they relate to future uncertainties. A sudden loss in any area of business will influence the return. This results in the profitability of the firm.  Capital budgeting is very complicated process because it is difficult  to estimate the cost of capital and to estimate the rate of return. Once the return is estimated a finance manager can find out within what time the investment can be reimbursed. So this is very difficult to calculate the return on investment. The cost incurred and benefits received occur at different time periods. Here arises the problem of time value of money. So the cost and benefits cannot be logically comparable. An investment made today is having a time value less than that of in future. So the return in the future period cannot be compared the investment made today. A man invests 10000 today in a business and he earns 2500 yearly. The time value of 2500 rupees may reduce to 2400 in the coming year. When we calculate the payback period, we find it difficult find an accurate period for reimbursing the initial investment.

  There are immeasurable considerations such as employee welfare, reputation of the firm etc. This is the area where the financial managers cannot forecast and foresee. This is a hidden cost which arises when the business starts functioning. This is a must for the business to run. Sometimes there will be huge cost may arise.  Capital budgeting is an irreversible decision. Once taken is taken, it cannot revert. If it is reverted, there occurs a huge loss. A business proposal starts with huge initial investment is a crucial decision for Enterprise. Once it is taken nobody can come back to the past. Whatever the consequence on the investment done has to be faced. Coming back to the past or in initial stage arises a huge loss. 

Elements of an advertisement copy

An advertisement copy is the ideas and message content which are reached to the viewers. The ad copy refers to all reading matter of an advertisement including the headline, subheads, texts or body. An advertiser or a copy writer should sacrifice a lot of time in making a copy. The elements or components of ad copy are:

Head line: The headline is the word in the attractive position in the advertisement .That is the words that will read first and situated to get more attraction. Usually the letters of the headline are larger than other parts. The different types of headline are label, Informative headline, provocative headline. Label is the headline which identifies the name of the product. Informative headline gives the in formations about a product. Usually it explains the attributes of the product. Provocative headline is the headline used in making a curiosity among the viewers. It insists the viewers to read.

Subheads and Body copy: This is the sub head captions that simply expand the headline thoughts. This headline takes the readers to read further. Subhead lines are known as the transitional bridge between the headline and copy text. Body copy is telling about the whole story of the product or service that a marketer wants to communicate. Body copy covers the features, benefits and utility of the product.

Slogans and Illustrations: Many slogans begin as successful headlines. Repeated usage becomes a popular one in among viewers. Slogan has two purposes; one is to provide continuity another is to memorize and repeat the statement among consumers. Illustrations part consists of photos, drawings, charts etc. the main objective behind this is to gain quick attention and comprehension of the product idea.

Identification and Closing idea: This is the content in which the seal, signature or logo of the firm is provided. This is to identify the sponsor or advertiser. Closing idea component emphasizes on an action. The action is the insisting the buyers to buy the product. The closing idea summarizes the messages, changes in the product, attitudes, all the information etc.

Dangers of Excessive and Deficiency of working capital

Working capital is just like a heart of business. If it is weak it cannot pump blood and human being cannot work and survive for long. Likewise if the working capital level of a firm goes down and higher investment in fixed asset will also effect in the business. Here dangers of deficiency and excessive working capital and advantages are discussed. Dangers of deficiency of working capital mean the low level of working capital than the required. This can be explained under. 

   Deficiency of working capital   may lead to business failure as the working capital is the heart, when it pumps slowly to the day to day operation. Business requires a clear operated environment everyday otherwise it leads to death.  The firm cannot take advantage of new opportunity or adopt change. Because inadequate financial troubles always become a headache for the managers, they cannot concentrate the untapped opportunities arising in the market.  Trade discount and    cash discount will be lost. Trade discount is the discount received at the time of purchasing raw materials. If we have adequate financial balance in our hand, we can meet the purchase amount and get the advantage of trade discount. Cash discount is the discount received after purchasing the raw material. There will be a credit period to repay the money. If we have enough cash, we can pay the money before the maturity date and get the discount.

  Financial reputation of the firm may be lost due to deficiency of working capital. A firm always complaining about shortage of money and losing the credit paying capacity leads to the loss of reputation. Creditors may apply to court for winding up. Creditors will be fed up with the search of their money repeatedly they definitely approach court to get the money back.  It also affects dividend policy adversely. Dividend policy is made on the profit earned by the organization. Inadequate working capital affects the profitability. This will reduce the rate of dividend. The company cannot utilize its fixed assets properly. A business firm may invest certain percentage of their capital in fixed asset. To run that fixed asset in full swing, there should be working capital. Machinery needs several financial requirements such as operators, electricity, fuel, oil etc.

Dangers of Excessive working capital mean the excess of the working capital above the normal. The dangers are discussed as; excessive working capital means idle funds in the business which gives no profit. Thus the rate of return falls. An idle fund doesn't make any result. It makes a burden to the organization. The value of share may fall due to lower rate of return on investment.  Efficiency of management may be declined. When there is sufficient fund in the business, accounts the management tends to lazier and the return remains the normal. But when we analyze the rate of return, it will be decreased. This affects the share price in the capital market.  Increased bad debt and wastage occurs. The management sometimes decide to raise the bad debt level and no efforts will be there to get the money back, when there is excess money in hand. This leads to low efficiency and wastage of money.

Factors influencing market segmentation

A market includes large number of buyers with different interests, tastes, age, sex, habits etc. In case of a movie, some people like action movies, others may like romantic or horror etc. Segmenting a market is a kind of dividing and rue principle. This dividing is done through grouping of customers according to their preferences, tastes, habits etc. Philip Kotler explains market segmentation is subdividing the heterogeneous market into homogeneous subsection of market. Factors influencing market segmentation are:

Resource of the organization is the first factor comes under discussion. Segmentation is a costly process. It involves expenditure for conducting surveys, designing and implementing different market mix etc. If the organization has sufficient fund, it can go for a good segmentation. Otherwise undifferentiated strategy is desirable. The competition existing in the market plays yet another role in deciding the market segmentation. A marketer while taking any decision must look at the competitor’s policy. If the marketer enjoys monopoly, then there is no need of segmentation. But in a competitive market, marketer should understand competitor’s policy.

Product life cycle is another factor that determines the market segmentation. A product has different stages in its life such as introduction, growth, maturity, saturation and decline. During introduction segmentation cannot carry on as the market cannot collect required information. During growth and maturity segmentation is possible. But during decline there is no segmentation. Also the nature of product is a determinant of segmentation. In the case of homogeneous product no segmentation is essential. It will be consumed by all classes of consumers. But for heterogeneous products, segmentation is necessary. The example of heterogeneous products is the clothing industry has segmentation such as kids, men, women, wedding etc. The nature of market is another factor too. If the market is sufficiently large and consumers have different taste and preferences, market should be segmented. In the case of small scale market undifferentiated policy will be successful.

Advantages and disadvantages of visual communication

Modern world became more visualized in every aspect due to the high influence of media. A consumer who thinks about buying a product will definitely visualize it in the mind for a while. So the use of visual communication is very crucial to the business man.  Visual communication is the communication in which pictures, colors, graphics are used. A skull and two cross bones shows the meaning of danger. Advantages of visual communication are:

Quick communication is possible. The use of pictures and symbols is very easy for a fast communication. The receiver gets the idea fast. An oral communication takes time to send the message and the receiver to get. But visual communication does not any further explanation for the receiver or by the sender. Also it enables to understand things at a glance: When the logos or trademark are posted, it will be easily understood to the people. The receiver gets the message than any the other media of communication.

 The visual communication is very useful to compare. When a consumer decides to buy a product, he will visualize the product with competitor’s product. Visual media always supported with signs and symbols this can be analyzed again and again. This facilitates the comparison. This facilitates to memorize things.  Visual communication is a good tool to memorize things. It is a good way to teach kids with the help of visual pictures. The same can be done in marketing activities. Visual communication becomes a bird’s eye. That is a bird watches the world on a tree can see every angles and it can wrist its neck in different way. The same application is possible for a consumer to see things in different way.

Disadvantage of visual communication is discussed as; the cost of going visual communication is very high. There should be a high consumption of time and needs experts to be appointed. Preparation of visual communication objects takes lot of hard work and dedication. Visual media alone is inefficient. It is done with the help of other media such as audio, computer based media etc. The visual media lacks the content. It can give the idea. But cannot tell the whole story. If the sender wants something to add other media support is necessary. Designing a good visual communication is very difficult. Sometimes it may lead to failure. So most of the organization opts for audio and visual based communication.